PRECIOUS METALS | ING: Bank of Canada Faces High Bar for Hawkish Shift, Inflation Outlook Remains Benign

According to Jin10, ING believes the Bank of Canada faces a high threshold for adopting a substantially hawkish stance, and expects no surprises from tonight's meeting. Unless oil prices rebound to levels seen in April and May, the inflation outlook remains too benign to warrant a rate hike, particularly given the downside risks to employment and economic activity stemming from USMCA uncertainty. ING noted that while the Bank of Canada's hawkish tilt and rising oil prices have supported the Canadian dollar in the near term, risk premiums related to the USMCA will continue to rise in the third quarter. The bank expects the USD/CAD pair not to fall below 1.40 in the coming months.